ra 9511

8/3/2019 RA 9511

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H No. 4358

Engtinarid held iiiPrlccroManila, OQ Monday. the tweniy-eiQlith

of .!uly, two thousand eight.

AN ACT GRANTlNGTHE NATIONAL GRID COXPORATIGl'iOF THE PHILIPPINES A FRANCHISE 7 CENGAGE tN THE BUSINESS OF COhTEYING 02

TRANSMITTING ELECTRICITY TtI11OUGli

HIGH VOLTAGE BACKBONE SYSTEM O FINTERCONNECTED TRANSMISSION LINES,SUBSTATIONS AND RELATED FACILITIES, A N 9

POX OTiIER PURPOSES

B E if e nw t e d

by fh eSenale

mid Houseof

R e p r r r m i a r r v e ~ /!J;,J

PlA'+pPoles ir , Cmigrerr ossrmbied,

SEsX0:J I . !Vatwe a,LdScope of Franchise - Subject c ,

the pru&ons of the Conat i t ; l t i on and applicable laws, r u l e s at.:!

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regulations. and suhlect to the terms and conditions of the

concession agreement and other documents executed with theNational Transmission Corporation (TRANSCO) and the Power

Sector Assets and Liabilities Management Cprporation (PSALM)pursuant to Section 21 of Republic Act No. 9136, which arb n o t

inconsistent herewith, there is hereby granted to the National

Grid Corporation of the Philippines, hereunder referred to as theGranteo, its successors or assigns, a franchise to operate, manage

and maintain, and in connection therewith, t o engage in thebusiness of conveying or transmitting electricity through high

voltage back-bone system of interconnected transmission lines,substations and relatedfacilities, systems operations, and otheractivities that are necessary to support the safe and reliableoperation of a transmission system and to construct, install,finance, manage, improve. expand,operate, maintain, rehabilitate,repair and refurbish the present nationwide transmission systemof the Republic of the Philippines. The Grantee shall continue tooperate and maintain the subtransmission systems which havenot been disposed by TRANSCO. Likewise, the Grantee i s

authorized to engageinancillary business and any related business

which maximizes utilization of its assets such as, but not limitedto, telecommunications system, pursuant toSection20 ofRepublicAct No. 9136. The scope of the franchise shall be nationwide inaccordance with the Transmission Development Plan, subject to

amendmentsor modificationsofthesaid Plan, as may he approved

by the Department of Energyof the Republic of the Philippines.

SEC. . Terms and Conditions of the Franchise. - Thisfranchise shall be for a term of fifty (50) years from the date of

effectivityof this Act, and is hereby granted under the conditionthat it shall be subject to amendment, alteration, or repeal by

Congress when the common good so requires. During the periodof operation of the franchise herein granted, a t least sixty perceritim (60%)ofthecapitaloftheGranteeshallheownedbycitizens

of the Philippines. The Grantee shallcomply with the Constitution

and applicahle laws pertaining to foreign ownership and

management of public utilities.

SEC... Manner of Operation of System or Facilities. -The transmission system. grid and related facilities maintained,operated or managed by the Grantee, its successorsor assigns,

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shall be operated and maintained at all times in accordance with

industry standards, and i t shall be the duty of the Grantee, its

successorsor assigns, whnnever required to do so by the Energy

Regulatory Commission (ERC) or its legal successor, to modify,

improve and change such system or facilities in such manner and

to such extent as the progress in science and improvements in the

electric power services mayreasonablyrequire.

SEc..4. R i g h t of E m i n e n t D o m a i n . - Subject to the

limitations and procedures prescribed by law, the Grantee isauthorized t o exercise the right of eminent domain insofar as it

may be reasonably necessary for the construction, expansion, and

efficient maintenance and operation of the transmission system

and grid and the efficient operation and maintenance of the

subtransmission systems which have not yet been disposed by

TRANSCO. he Grantee may acquire such private property as is

actually necessary for the realization of the purposes for whichthis franchise is granted: Prouided, That the applicable law on

eminent domain shall be observed, particularly, the prerequisites

of taking of possession and the determination and payment ofjust

compensation.

SEc. 5. R i g h t of th e Gouernmenb - A special right is

hereby reserved t o the President of the Philippines, in times of

war, rebellion, public peril, calamity, emergency, disaster, ordisturbance ofpeace and order, to temporarily take over and operate

the transmission system, and/or the subtransmission systems

operated and maintained by the Grantee, to temporarily suspend

the operation of any portion thereof, or the facility in txe interest

of public safety, security and public welfare, or to authorize the

temporary use and operation thereof by any agency of the

government upon due compensation to the Grantee for the use of

the said transmission system, and subtransmission systems and

any"portion thereof during the period when they shall be sooperated.

SEC. 6. Sale, Lease, Transfer, Usufruct, e tc . - The

Grantee shall not lease, transfer, grant the usufruct of, or sell

this franchise or the rights and privileges acquired hereunder t o

any person, firm, company o r other commercial or legal entity,

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nor merge with any other company or entity, nor shall the

controlling nterest of the Grantee be transferred, whether in whole

or in part, and whether simultaneously or contemporaneously, to

any person,firm,ompany or entity without the prior approval ofthe Congress of the Philippines: Prouided, That the foregoing

limitation shall not apply to any transfer or issuance of sharesofstock in the implementation of the requirement for the Grantee's

dispersal of ownership pursuant to Section 8 of this Act; or to any

issuance of shares to any foreign or local investors pursuant to or

in connection with any increase in the Grantee's authorized capital

stock which results in the dilution of the stockholdings of the

Grantee's t6en existing'stockhoIders: Provided, moreouer, That

the foregoing limitations shall not apply to any transfer, sale orissuance of shares of stock at the levelof corporate stockholders of

the Grantee: Prouided, furthermore, That the for@goinglimitations

shall not apply in case of assignment or transfer of the operation

of any of its related business s~uch s, but not limited t o ,

telecommunications business-to another entity: . ,Provided,howeuer, That any such transfer;sale o r issuance a t thelevel of

the corporate stockholders of the Grantee is in accordancewith

applicable constitutional limitations: Prouided, finally, That any

person or entity to-which such shares are sold,, ransferred or

assigned under this Actshall be subject to the same conditions,

terms, restrictions and limitations of this Act. .. . ,

I , ,

SEC. 7. Cross-Ownership;M a r k e t Power Abuse a n d

Anti-Competitiue Behauior. -The Grantee shall not engage ;1any anti-competitivebehavior. inFluding, but not limited to, crossi

subsidization, price or market ma~pula tion ,r other unfair trade

practices' detrimental to the encouragement and protectida ofcontestable markets. : . .;,

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The Grantee or any of its stockholders, directors~or fficers

thereof, o r any of their relativmwithin the fourthcivil de,greeofconsanguinity and their respective spouses, shall not b,eallowed

tohold any shares of stock in any Power Industry Player as,de&ed

in this Act. And a Power Industry Player or itsstockholders,

directors or officers thereof, or any of their relatives.within thefourth civil degree of consanguinity and their respectiGespouses,

shall not be nllowed t o hold any shares of stock in the Grantee:

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Prouided, That the cross-ownership prohibitlon under this

provision shall not apply to a relative by blood or marriage, if such

relative of any stockholder, director or officerof the Grantee has

no employment, consultancy, fiduciary, contractual,commercial

o r other economic relationshlp or interest in the Grantee, or

conversely, if such relative of any stockholder, director o r officer

of a Power Industry Player has no employment, consultancy,

fiduciary, contractual,commercialor other economic relationshipor interest in the Power Industry Player: Prouided, further, Thatthis prohibition on cross-ownershipshall not apply to: (a)ownership

of shares of stock in a company listed in the Philippine Stock

Exchange (PSE) even if such listed company is a Power Industry

Player, if such share ownership is n o t more than onepercentum

(1%)f the totaloutstanding shares of suchlisted Power Industry

Player; or @) ownership of shares of stock which is not more than

one p e r centuin (1%)n a company listed in the PSE whkh owns

or controls shares of stock in the Grantee: Prouided, moreover,That such owner of shares of stock in the listed corporate

stockholder of the Granteeshallnot own more than oneper centum

(l%)of hesharesofstockor equityinterestinany Power Industry

Player.

No shares of stock issued or acquired in violation hereof

shall be allowed to vote or be entitled to representation at any

stockholders’meetingof the Grantee, nor shall the holder thereof

be entitled to any of the rights of a stockholder of the Grantee,

including the right to dividends, during the existence of such

prohibited cross-ownership.

The losing bidders in the bid t o operate the transmission

and subtransmission facilities of TRANSCO, their principals,

subsidiaries, affiliates, stockholders. directors and officers shall

not be allowed to, directly or indirectly, be transfereeso r beneficial

owners of the Grantee’s shares of stock o r any ownership rightspertaining thereto, for a period of ten (10)years from the effectivity

of this Act.

The losing bidders, their principals, subsidiaries. affiliates.

stockholders, directors and officers are likewise prohibited to,

directly or indirectly, acquire or receive any pecuniary interest in

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the operations by the Grantee of this franchise fo r a period of ten

(10)years from the effectivityof this Act.

An “affiliate”means any person which, alone or.togetherwith any other person, directly or indirectly, through one (1)or

more intermediaries, controls, is controlled by, or is under common

control, with another person. As used herein, “control”shall mean

the power to direct or cause the direction of the management

policies of a person by contract, agency or otherwise.

A “Power Industry Player” fo r pmposes of this,prbvision

means a generationcompany, distributionutility,or its respective

r affiliate, or other entity engaged in generating and

ectricity specified by the ERC.

e provisions on cross-ownership under Section”45 of

No. 9136 which are inconsistent with this provision

emed modified accordingly insofar as theGrantee is. h e Grantee may provide ancillary servicesor engage

in a0y:related business which maximizes utilization of its assets.

~.%Ec: 8 . Dispersal of Ownership . -The Grantee shall list,the requirements of the Securities and ExchaTge

(SEC)and the PSE, and make a public offeringof theresenting at least twenty p e r centurn (20%) af,its

capitalstock or ahigherpercentage that may hereafter

y law within ten (10)years from the commencement

ons: Provided, That the listing in t he~P SE f any

ich directly or indirectly owns or controls at leastth$@&enturn (30%) f the outstanding shares of stock of the

:Grantc+shall. ~ . . be considered full compliance of this listingrequkement. In case compliance with this requirement is not

reac$+l,tbe ERCmay, upon application of the Grantee, and after

notice and hearing, allow such reasonable extensionof the period

within which the Grantee should list it s shares of stock,.if the

market condition is not suitable for such listing.

. .. ... .

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SEC.. Tar Prouisions. -In consideration of the franchise

and rights hereby granted, the Grantee, its successorsor assigns,

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shall pay a franchise tax equivalent to three percent (3%) of all

gross receipts derived by the Grantee from its operation under

this franchise. Said tax shall be in lieu of income tax and any and

alltaxes, duties, fees and chargesof any kind, nature or descriptionlevied, establishedor collectedby any authority whatsoever, local

or national, on its franchise, rights, privileges, receipts, revenues

and profits, and on properties used inconnectionwith its franchise,

from which taxes, duties and charges, the Grantee is hereby

expressly exempted: Provided, That the Grantee, its successors

or assigns, shall be liable t o pay the same taxes on their real

estate, buildings and personal property, exclusiveofthisfranchise,

as other corporations are now or hereby may be required by law to

pay: Prouided, further, That payment b y Grantee of ,theconcession fees due to PSALM under the concession agreement

shallnot be subject to income tax and value-added tax (VAQ.

SEC. 10. Acceptance and Compliance. -Acceptance of thishanchise shallbe given in writing by the Grantee within sixty

(60)days after the effectivityof thisAct.

SEC. 11. Warranty in F a v o r of National and LocalGovernment. -The Grantee shall hold t h e national, provincial

and other local governments of the Philippines harmless from all

claims, accounts, demands or actions arising out of accidents or

injuries, whether to property o r persons, caused by the

construction, installation, operation and maintenance of the

transmission system and the grid.

SEC.12. Ingress a n d Egress. - For the purpose ofconstructing and/or maintaining transmission and

subtransmission assets andother related supportfacilities, it shall

be lawful for the Grantee, its snccesmrs and assigns, with the

approval of the relevant national and local government agencies

concerned and the posting of bonds, as may be appropriate, to

make excavations or lay conduits in any of the public places,

highways, streets, lanes, alleys, avenues, sidewalks o r bridges

within the Philippines: Prouided, however,That any public place,

highway, street, lane, alley, avenue, sidewak orbridge disturbed,altered o r changed by reason of the construction andlor

mainkmanceof transmission and suljtransmission assets and other

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related support facilities shall be immediately repaired and

properly restored at the expense of the Grantee, its successors and

assigns, in accordance with the standards set by th e relevant

national and local government agencies concerned.

SEC.13. Transfer ofPersonnel. -Pursuant t o Section 63

of Republic Act No. 9136 or the EPIRA Law, and subject to the

qualification requirements as may be set by the Grantee, andsubject further to the continuedexistence of their positions and

functions in the Grantee’s work force, current employees of

TRANSCO shall be given preference within the one hundred

siuty-five (165)-dayperiodfromcommencement dateover new job

applicants in the hiring by th e Grantee of its manpower

requirements.

Nokwithstanding he grant of this franchise, and subject to

the conditions provided herein, employees of TRANSCO shallbe

entitled to receive from the government all benefitsprovided -der

Section 63 of Republic~ActNo. 9136 without prejudiceto such

other additional benefitsas the Board of Directors ofTRANSCOmay determine.

SEC. 14. Applicubitity Clause:-The Grantee shall comply

with and be subject t o the provisions of Commonwealth Act No.

146, as amended, otherwiseknown as the “PublicServicesAct”,which have nototherwise been modified or repealed by Republic

Act No. 9136, otherwise Xnovonas,the Electric Power Industry

Reform Act of 2001. , ,

SEC.15. Reportorial Requirement. - The Grantee shall

‘submitanannual report offinances and operations to the Congress

of the Philippines.

SEC.16. Separabili ty Clause. -If, for any reason, any of

the sections or provisions of this Act is declared unconstitutional

or invalid, the other parts or provisions hereof which are not

affected thereby shall continue to be in full force and effect.

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S E C . 17. Effectivity Clause. - This Act shall take effect

fgteen (15)days from the date of its publication, upon the initiative

ofthe Grantee, inat least two (2)newspapers of general circulation

in the Philippines.

Approved,

This Act which originated in the House ofRepresentatives

was finally passed by the Houseof Representatives and the Senate

on November 13,2008 and November 17,2008,respectively.

Secretary of the Senate Se cre tav GeneralHouse of Representatives

0

GLORIA

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